Influence of Traditional Assets on Bitcoin's Price

Papinder Singh, Kiret Singh (2022) Influence of Traditional Assets on Bitcoin's Price. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

Text Kiret Singh 19WBR11190 full text.pdf Restricted to Registered users only Download (3MB)

Abstract

This study aims to look at the link between Bitcoin's price and performance of traditional assets starting from January 2019 to January 2021. The volatility of Bitcoin's price in the foreseeable future has been a widespread concern, which is the primary motivator for me to get involved in this sector. The research will continue with the addition of traditional assets to see how they affect Bitcoin's price. To put it another way, our goal is to see if paying attention to traditional assets can help fix the worldwide Bitcoin pricing problem.This study uses several analysis tools such as preliminary tests and diagnostic checking to evaluate the relationships. ADF and PP test are the two unit root tests used in this study. Granger Causality test will also be implemented in this study to test the causality. Laglength selections is used to determine the appropriate lag length. Other than that, diagnostic checking such as Heteroskedasticity and Serial Correlation LM Test is utilised to examine if the model is free from heteroskedasticity and serial correlation problems. Also, Normality test such as Jarque-Bera test is employed to examine whether the data in the model have normality distributed. This appropriate for the above models will be provided and empirical issues will also be addressed. The findings of this study show that the price of gold and the S&P 500 are inversely correlated with the price of Bitcoin in both the short and long run, while the price of WTI crude oil is insignificant in explaining Bitcoin prices. As a result, ordinary investors and financial institutions should closely monitor the price of gold and the S&P 500 in order to forecast changes in the price of Bitcoin and profit from trading or investing in the cryptocurrency.